ROI-Musk's AI win, Meta's cash burn, and the CoreWeave conundrum: The financial week in five charts

NVIDIA

Today 11:37

The opinions expressed here are those of the authors.
By Anna  Szymanski
Oct 23 (Reuters) - Every Friday, Reuters Open Interest (ROI) distills the financial week into five key charts, spotlighting the major trends, surprises and overlooked moves that defined the past five days.
     
1. LIFTOFF
ANNA SZYMANSKI, ROI Editor-in-Charge: Elon Musk's SpaceX SPCX.O on Tuesday posted its first profit since its IPO four months ago. Third-quarter revenue rose 161% year-on-year to $14.6 billion, with half of that generated by the rocket maker's AI business — an early sign that its heavy spending on the technology could be paying off.
The news lifted SpaceX shares and the tech-heavy Nasdaq .IXIC on Wednesday, though headlines were mostly dominated by discussion of a potential merger between SpaceX and Tesla TSLA.O, which Musk said was "a good idea."
     
2. OAT AND BOTHERED
MIKE DOLAN, ROI Finance & Markets Columnist: After a weekend of riots on French streets, the 10-year French government bond yield FR10YT=RR surged above 5% on Wednesday for the first time in 24 years. Meanwhile, the premium investors demand to hold French debt over German equivalents DE10YT=RR continued to balloon, blowing past 170 basis points on Thursday for the first time since the height of the European debt crisis in 2011.
That reflects nerves over possible credit rating downgrades, further street unrest and a prolonged period of political stasis that could keep annual budget deficits above 5% of GDP, all ahead of next April's presidential election. If there is a magic solution to this saga, it remains hard to see. Prepare for a long, nervy wait. 
     
3. NEW ABNORMAL
RON BOUSSO, ROI Energy Columnist: Crude oil exports from the Middle East have risen above their pre-war levels so far in October, suggesting that producers are willing to risk transits through the Strait of Hormuz despite a sharp rise in Iranian attacks on ships.
However, that doesn't indicate a return to normality. Producers and consumers are relying on an expensive and increasingly elaborate web of logistical solutions, while crude prices LCOc1 remain at five-month highs — a sign that investors may already be bracing for another round of regional escalation.
     
4. IN THE RED
MIKE DOLAN, ROI Finance & Markets Columnist: Shares in Facebook and Instagram parent Meta Platforms META.O gave up early gains in after-hours trading on Wednesday, even as it beat third-quarter revenue estimates and gave a strong fourth-quarter outlook. 
This may partly reflect the hyperscaler's announcement of a new non-voting share class. This plan appears to be driven by efforts to keep founder Mark Zuckerberg in California, as he could face a hefty tax bill and need to sell shares if the state's proposed wealth tax passes. 
But it also speaks to the company's need to fund its AI push, the cost of which is becoming clearer. Meta clocked its first quarterly cash burn in more than a decade, reporting negative free cash flow of $2 billion in the third quarter, compared with positive cash flow of almost $11 billion a year earlier.
     
5. SCHRODINGER'S NEOCLOUD
JAMIE MCGEEVER, ROI Markets Columnist: CoreWeave CRWV.O has been at the center of the latest market maelstrom to hit the AI space. The Nvidia-backed NVDA.O AI infrastructure firm is loss-making, heavily indebted and faces soaring borrowing costs, as its bond risk premium over Treasuries has widened dramatically.
But Wall Street analysts have wildly different views about its prospects. HSBC analysts this week published an extremely gloomy note, forecasting average returns through 2030 below CoreWeave's cost of borrowing and advising investors to cut their holdings of the stock. Looking at the ​same data, however, equity strategists at Goldman Sachs raised their recommendation on the stock to a "buy" from "neutral."
  
Opinions expressed are those of the authors. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

(By Anna Szymanski;
Editing by Marguerita Choy)
((anna.szymanski@thomsonreuters.com))